Escanaba, UPPCO reach agreement

December 16, 2013

ESCANABA - Escanaba and the former long-time operator of the city's power plant tied up some loose ends following recent mediation on their termination agreement dating back to 2011.

During a joint meeting with the Escanaba Electrical Advisory Committee (EAC) last week, city council approved a payment of $312,500 to the Upper Peninsula Power Company (UPPCO) to finalize the contract between the two parties.

UPPCO had operated and maintained the Escanaba power plant since it opened in 1958. The agreement between the city and UPPCO was terminated when their latest contract

Prior to the termination of UPPCO's contract, the city had decided to sell the coal-fueled plant because it is more cost-effective to buy electricity from a power supplier rather than the city generating its own energy at a loss. On the other hand, a private owner could receive rebates and tax incentives to operate the facility.

Escanaba has been purchasing energy from power supplier NextEra of Juno Beach, Fla., since Jan. 1, 2012.

For more than three years, the city has been negotiating sales of the power plant. Two firms interested in buying the plant, backed out of negotiations. A third company, Escanaba Green Energy (EGE), has negotiated an agreement with the city and is in the process of securing funding to close the deal.

During Wednesday's meeting, EGE President Charles Detiege presented an update on the loan process. He said he's hopeful that by the end of December, a closing date can be scheduled for January.

EGE has been planning to buy the power plant for nearly two years. Recent setbacks delaying the sale have been due to the lending process to secure the $36.5 million in financing needed to buy the coal-fueled facility and convert it to burn biomass. The city is selling the plant and 17 acres for $4.1 million.